This Easter, 100 years on, I’m wondering if the Twenties could roar again

The Roaring Twenties were the antidote for World War I and the last global pandemic, a dimension of tough times we have all but forgotten
History has a curious habit of repeating itself, especially the bad bits – but could there be a period of prosperity and spontaneous creativity once we deal with current crises?

Neil Newman

Published: 8:00am, 5 Apr 2021

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KICKING OFF THE 20TH CENTURY

The early part of the 20th century was an exciting time to be alive. With the development of electric railways, subway trains, and the mass production of double-decker buses, people could travel inexpensively and comfortably.

The art of cinema was finding its feet, films became longer, and movie theatres became a good way to spend a night out. A bourbon-laced Old Fashioned was the cocktail of choice at the time, before your newly invented vichyssoise was served. People suddenly dined out a lot.

Household electrical goods were popular by the 1910s as vacuum cleaners and washing machines became available, suburban homes were hooked up to mains electricity, and consumers could also buy refrigerators and early air conditioners. Another hot product was the telephone, with millions of homes connected for a chat. And what better thing to chat about than the news, back in the heyday of the newspaper business?

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Assembly-line mass production made cars affordable and put them within reach of many more families. But to travel long distances, you’d likely opt for a cabin on a luxurious ocean liner such as the brand new Titanic, or perhaps even a rigid airship. It was at this time that tea bags and instant coffee first arrived on grocers’ shelves. Aside from the lack of consumer electronics, one can imagine that life back then wasn’t all too different from today.

Economies boomed – and none more so than the United States, where demand for oil, stainless steel and textiles grew as the era of automobiles and aviation was ushered in. Businesses expanded, they merged with or simply took out the competition. Taking on more functions, from manufacturing to directly selling products, they vertically integrated.

The train of progress was steaming ahead – and then was brought to a screeching halt by a war and a pandemic.

CAUGHT UNAWARES

My grandfather was born in 1910, just before World War I, and while he was still a child, the world was also caught unawares by a global pandemic.

A variant of the H1N1 virus, the Spanish Flu infected about 500 million people worldwide, claiming between 17 and 100 million lives – nobody really knows for sure. With a global population of about 1.7 billion at the time, that was a significant percentage, coming just on the heels of the losses in the Great War.

There were no vaccines for the disease – all you could do was take aspirin for the symptoms. But like today, people bravely went about their daily lives as best they could, wearing masks on the streets and at work, and on doctors’ advice avoided shaking hands. Sporting events were cancelled, and dance halls, theatres, cinemas and churches closed – though if you were in Britain, pubs remained open.

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Having survived the Great War and the Spanish Flu, grandad moved on to happier times: marrying a local girl and starting a family that grew to three sons and a daughter. However, the world was soon at war again and he was called up, joining the Royal Marines as an anti-aircraft gunner in North Africa and Europe. He shot down German bombers flying at him.

Having never experienced war first-hand – though I saw one live on television in 1990 – or even caught as much as a cold in the past year, I complain that the pub is not open. Shame on me. Thinking of those difficult times two generations earlier makes me very grateful for the world in which I grew up and had a family.

Members of the Red Cross Motor Corps in 1918, all wearing masks against the further spread of the influenza epidemic, carry a patient into their ambulance in Saint Louis, Missouri. Photo: Getty Images

The Spanish Flu trampled on economies, but it eventually passed, and the period of “normality” that followed became known as the Roaring Twenties – the perfect antidote to the preceding six years. Economies exploded again as people, sometimes literally, went berserk.

OPENING THE FLOODGATES

As pent-up demand was released in 1921, it unleashed a wealth boom and almost a decade of significant inspiration, creativity and fantastic fashion that has not been rivalled since. What a time it would have been for my grandparents, being teenagers and getting married in the thick of it all.

This has made me think that if history would please kindly repeat itself, we may have a few interesting years to look forward to, both culturally and financially.

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To explore my hypothesis further, I thought it would be interesting to take a quick look at the US stock market, the Dow Jones Index (DJI), in the early part of 1900s – before, during, and after the Spanish Flu.

From 1901 to 1919, the DJI rallied 150 per cent. Though the drivers during that period were different, it’s interesting to note that stocks collapsed following a US banking crisis in 1907 as speculators tried to corner the copper market and borrowed heavily. As they defaulted on loan payments, the banks came under severe stress and sent stocks into a tailspin. Doesn’t that sound all too familiar? It led to the creation of the Federal Reserve Bank, which bailed Wall Street out of a similar mess in 2008.

A custodian places a lit candle outside 10 Downing Street in London to mark one year of Covid-19 and to honour those who lost their lives. Photo: EPA

The DJI halved by the summer of 1921 in a period of economic stress and deferred spending induced by the pandemic. Emerging from this, the economy and markets went on a tear as consumption ballooned. Having been pent up and frustrated, people travelled, borrowed, and leveraged up to buy stocks. The martini-soaked Roaring Twenties led a near-500 per cent rally in the DJI before crashing in 1929.

Our grandparents suffered through two world wars and the Spanish Flu, and still managed to rebuild. While we’ve had to contend with our own destructive pandemic, which will pass, we haven’t seen a major war for years. The sabre-rattling in this corner of the world is something we’ve got used to. Hopefully that’s all there’s to it.

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THE ROARING TWENTY-TWENTIES

While the impact of Covid-19 has been a far cry from that caused by the Spanish Flu, which lasted three years, there may be good reasons to expect to see a boom as a result of deferred spending. Governments have given out money for people to spend, but lockdowns have prevented many from doing much else other than shop online. There is a lot of pent-up energy and wanderlust, with a fat wad of cash burning holes in consumer pockets.

So while I’m at home this Easter, somewhat grumpy that I’m not free to do exactly what I want with the five-day weekend, I’ll be digesting what my grandparents went through some 100 years ago, and while hoping for better times I’ll pay homage and enjoy some jazz, dry martinis, and scalloped potatoes – all products of the fabulous 1920s.

If we learn from history, avoiding conflict and ridding ourselves of the pandemic, I wonder if we could be in for something like a rerun of the Roaring Twenties? The economic forces at play may be different, but the sentiment of people may turn out to be similar. We could be in for the most exciting period this century.

Neil Newman is a thematic portfolio strategist focused on pan-Asian equity markets